Late Start for Driver Fee Hikes Causes Budget Crunch

A two-month delay between the start of the current fiscal year and the implementation of increased fees for driver’s license and license plate renewals combined with an economic slow down that has fewer people paying the fees put the Department of Highway Safety and Motor Vehicles in a “precarious position,” officials told a Senate panel Wednesday.

Last spring, lawmakers approved a bevy of driving-related fee hikes to bring in cash to balance the budget, including upping the cost of renewing a driver's license from $20 to $48 and raising motor vehicle registration fees for new cars from $100 to $225 per vehicle.

But because the fees did not take effect until Sept. 1, two months after the 2009-10 fiscal year began, the department was left struggling to pay the July and August salaries of state troopers. That’s put them in a hole that’s been hard to make up.

“(Florida Highway Patrol) salaries is what caught us,” DHSMV Legislative Affairs Administrator Steven Fielder told the Senate Transportation and Economic Development Committee. “July and August payroll for the patrol was about $10 million per month, which meant we spent all of the cash we had to make that up.”

The situation has not improved much in the intervening months, Fielder told the panel.

“We have $18 million (in the bank) as of Feb. 10,” he said. “Our payroll is $19.2 (million),” he said, noting that the payment isn’t due until the end of the month, so the agency expects to have enough to just cover the cost of paying employees.

Overall vehicle registrations are down about 1.5 percent, Fielder said, and sales have slowed on other items that saw fees increased, like driving records.

“Some of the fees we’re getting (are from things) the customer didn’t have to buy and when the fees went up, they chose not too,” Fielder added, citing insurance agents and car rental companies customers who have slowed their requests for driving records, for example.

“We’re seeing the biggest decrease in the issuance of new plates, so people are not adding to their fleet,” he said. “They’re not buying cars, and if they are, it’s a replacement, not additional.”

To cope with the shortfall created by the delay in the implementation of the fee hike and the decreased revenue from fees, which Fielder estimated was $34 million, he said the DHSMV has frozen hiring, leaving 62 positions that were budgeted for last year vacant.

“The combination of the $20 million of the two month of salaries and then $34 million in reduced revenues has put us in a precarious position,” Fielder told the panel. “We’re not filling any positions and we’re not spending any money except to buy gas, cardstock – the blank driver’s license in other words, and the actual metal plates.”

Committee Chairman Mike Fasano, R-New Port Richey, told lawmakers that the shortfall wasn’t the DHSMV’s fault, even as he said they might have to fix it in an upcoming meeting of the Legislative Budget Commission or with legislation this year.

“This is because we decided that they would all go trust fund,” Fasano told the Senate TED committee. “Had we maybe done it a different way where the increases started July 1 and not in September, we wouldn’t see as much of this issue.”

However, even as highway safety officials were complaining of shortfalls in the current budget, Fasano added that the chief Senate budget writer, Sen. J.D. Alexander, R-Lake Wales, is considering lowering some of the fee hikes that went into effect last year. Those increases last year were largely opposed by Democratic lawmakers, who said they fell hard on poor people already impacted by the economic downturn.

“I’m not going to guarantee this, but Sen. Alexander and I have spoken and we’ve directed staff…to start looking at ways we might be able to bring down the cost of the increased tag renewal that we saw this past year,” Fasano said. “To see if we somehow can come up with a formula that can reduce the cost of the tag fee without having any huge impact – hopefully no impact – on the trust fund dollars that are going to the agency.”

Fielder said the department expects to collect about $2 billion in the current fiscal year.